[Federal Register Volume 62, Number 137 (Thursday, July 17, 1997)]
[Notices]
[Pages 38257-38263]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18871]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-357-005]
Cold-Rolled Carbon Steel Flat-Rolled Products From Argentina;
Preliminary Results of Countervailing Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of countervailing duty
administrative review.
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SUMMARY: The Department of Commerce (the Department) is conducting an
administrative review of the countervailing duty order on cold-rolled
carbon steel flat-rolled products from Argentina. For information on
the net subsidy, see the Preliminary Results of Review section of this
notice. If the final results remain the same as these preliminary
results of administrative review, we will instruct the U.S. Customs
Service to assess countervailing duties as indicated in the Preliminary
Results of Review section of this notice. Interested parties are
invited to comment on these preliminary results.
EFFECTIVE DATE: July 17, 1997.
FOR FURTHER INFORMATION CONTACT: Richard Herring, Office of CVD/AD
Enforcement VI, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)
482-2786.
SUPPLEMENTARY INFORMATION:
Background
On April 26, 1984, the Department published in the Federal Register
(49 FR 18006) the countervailing duty order
[[Page 38258]]
on cold-rolled carbon steel flat-rolled products from Argentina. On May
6, 1992, the Department published a notice of ``Opportunity to Request
an Administrative Review'' (57 FR 19412) of this countervailing duty
order. We received a timely request for review from U.S. Steel Group, a
unit of USX Corporation.
We initiated the review, covering the period January 1, 1991
through December 31, 1991, on June 18, 1992 (57 FR 27212). The review
covers two producers/exporters of the subject merchandise, Sociedad
Mixta Siderurgica Argentina (SOMISA) and Propulsora Siderurgica,
S.A.I.C. (Propulsora), which account for all exports of the subject
merchandise from Argentina, and 20 programs.
On September 17, 1993, petitioners brought timely new allegations
to the Department concerning the provision of tax concessions and
preferential natural gas and electricity tariff rates to steel
producers. Petitioners cited alleged tax concessions provided to the
steel industry under Paragraph 8 of the April 11, 1991 Steel Agreement
between the Government of Argentina (GOA) and Argentine steel
producers, and preferential natural gas and electricity rates provided
under Paragraph 6 of the Steel Agreement. On November 15, 1993, the
Department requested information from the GOA on these alleged subsidy
programs.
On January 1, 1995, the effective date of the Uruguay Round
Agreements Act of 1994 (the URAA), certain countervailing duty orders
involving World Trade Organization (WTO) signatories which had been
issued without an injury determination by the International Trade
Commission (ITC) became entitled to an ITC injury determination under
section 753 of the URAA. The order on cold-rolled carbon steel flat-
rolled products did not receive an ITC injury investigation and
Argentina was a member of the WTO. On May 26, 1995, the Department
published a notice allowing domestic parties an opportunity to seek an
injury test regarding this and other countervailing duty orders. See
Countervailing Duty Order; Opportunity to Request a Section 753 Injury
Investigation, 60 FR 27963. For this order on cold-rolled carbon steel
flat-rolled products from Argentina, no domestic interested parties
requested an injury investigation. As such, the ITC made a negative
injury determination with respect to this order, pursuant to section
753(b)(4) of the URAA. Thus, the Department revoked this countervailing
duty order, effective January 1, 1995, pursuant to section 753(b)(3)(B)
of the URAA. See, Revocation of Countervailing Duty Orders, 60 FR 40568
(August 9, 1995).
The Ceramica Decision by the Court of Appeals for the Federal
Circuit
On September 6, 1995, the Court of Appeals for the Federal Circuit,
in a case involving imports of Mexican ceramic tile, ruled that, absent
an injury determination by the ITC, the Department may not assess
countervailing duties under 19 USC 1303(a)(1) (1988, repealed 1994) on
entries of dutiable merchandise after April 23, 1985, the date Mexico
became ``a country under the Agreement.'' Ceramica Regiomontana S.A. v.
U.S., 64 F.3d 1579 (Fed. Cir., 1995) (Ceramica).
Argentina attained the status of ``a country under the Agreement''
on September 20, 1991. Therefore, in consideration of the Ceramica
decision, the Department, on April 2, 1996, initiated changed
circumstances administrative reviews of the countervailing duty orders
on Leather, Wool, Oil Country Tubular Goods (OCTG), and Cold-Rolled
Carbon Steel Flat-Rolled Products (Cold-Rolled Steel) from Argentina,
which were in effect when Argentina became a country under the
Agreement. See Initiation of Changed Circumstances Countervailing Duty
Administrative Reviews: Leather from Argentina, Wool from Argentina,
Oil Country Tubular Goods from Argentina, and Cold-Rolled Carbon Steel
Flat Products from Argentina, 61 FR 14553 (April 2, 1996). These
reviews focused on the legal effect, if any, of Argentina's status as a
``country under the Agreement,'' and whether the Department has the
authority to assess countervailing duties on these orders. Because we
had ongoing administrative reviews of the orders on OCTG and Cold-
Rolled Steel that covered review periods on or after September 20,
1991, we also had to determine whether the Department had the authority
to assess countervailing duties on unliquidated entries of subject
merchandise occurring on or after September 20, 1991, when Argentina
became a ``country under the Agreement'' and before January 1, 1995,
the date that Argentina became a ``Subsidies Agreement country'' within
the meaning of section 701(b) of the URAA.
On April 29, 1997, the Department determined that it lacked the
authority to assess countervailing duties on entries of OCTG and Cold-
Rolled Steel from Argentina made on or after September 20, 1991 and
before January 1, 1995 (62 FR 24639; May 6, 1997). As a result, we
terminated the pending administrative reviews of the countervailing
duty order on OCTG covering 1992, 1993, and 1994, as well as the
pending administrative reviews of the countervailing duty order on
Cold-Rolled Steel covering 1992 and 1993.
However, because the 1991 review covers a period before Argentina
became a ``country under the Agreement,'' we must continue the 1991
administrative review to determine the amount of countervailing duties
to be assessed on entries made between January 1, 1991 and September
19, 1991. Entries of subject merchandise made on or after September 20,
1991 will be liquidated without regard to countervailing duties.
Applicable Statute
The Department is conducting this administrative review in
accordance with section 751(a) of the Tariff Act of 1930, as amended
(the Act). Unless otherwise indicated, all citations to the statute are
in reference to the provisions as they existed on December 31, 1994.
Scope of the Review
Imports covered by the review are shipments of Argentine cold-
rolled carbon steel flat-rolled products, whether or not corrugated or
crimped; whether or not painted or varnished and whether or not
pickled; not cut, not pressed, and not stamped to non-rectangular
shape; not coated or plated with metal; over 12 inches in width and
under 0.1875 inches in thickness whether or not in coils; as currently
provided for under the following item numbers of the Harmonized Tariff
Schedule (HTS):
7209.11.00, 7209.12.00, 7209.13.00, 7209.14.00, 7209.21.00, 7209.22.00,
7209.23.00, 7209.24.00, 7209.31.00, 7209.32.00, 7209.33.00, 7209.34.00,
7209.41.00, 7209.42.00, 7209.43.00, 7209.44.00, 7209.90.00, 7210.70.00,
7211.30.50, 7211.41.70, 7211.49.50, 7211.90.00, 7212.40.50
The HTS item numbers are provided for convenience and Customs purposes.
The written description remains dispositive.
Calculation Methodology for Assessment and Cash Deposit Purposes
We calculated the net subsidy on a country-wide basis by first
calculating the subsidy rate for each company subject to the
administrative review. We then weight-averaged the rates received by
each company using as the weight each companies share of total
Argentine exports to the United States of subject merchandise,
including all companies, even those with de minimis and zero rates. We
then summed the weight-averaged rates to determine the subsidy rate
from all programs benefitting
[[Page 38259]]
exports of subject merchandise to the United States.
Since the country-wide rate calculated using this methodology was
above de minimis, as defined by 19 CFR Sec. 355.7 (1994), we proceeded
to the next step and examined the net subsidy rate calculated for each
company to determine whether individual company rates differed
significantly from the weighted-average country-wide rate, pursuant to
19 CFR Sec. 355.22(d)(3). Propulsora had a significantly different net
subsidy rate during the review period pursuant to 19 CFR
Sec. 355.22(d)(3). Therefore, this company is treated separately for
assessment purposes. All other companies are assigned the country-wide
rate.
Analysis of Programs
I. Programs Conferring Subsidies
A. Programs Previously Determined to Confer Subsidies
1. Rebate of Indirect Taxes (Reembolso/Reintegro)
The Reembolso program provides a cumulative rebate of indirect
taxes paid upon export and is calculated as a percentage of the f.o.b.
invoice price of the exported merchandise. The Department will find
that the entire amount of any such rebate is countervailable unless the
following conditions are met: (1) The program operates for the purpose
of rebating prior stage cumulative indirect taxes and/or import
charges; (2) the government accurately ascertained the level of the
rebate; and (3) the government reexamines its schedules periodically to
reflect the amount of actual indirect taxes and/or import charges paid.
In prior investigations and administrative reviews of the Argentine
Reembolso program, the Department determined that these conditions have
been met, and, as such, the entire amount of the rebate has not been
countervailed (see, e.g., Cold Rolled Carbon Steel Flat-rolled Products
from Argentina, Final Results of Countervailing Duty Administrative
Review (56 FR 28527; June 21, 1991); Oil Country Tubular Goods from
Argentina, Final Results of Countervailing Duty Administrative Review
(56 FR 64493; December 10, 1991).
However, once a rebate program meets this threshold, the Department
must still determine in each case whether there is an overrebate; that
is, the Department must still analyze whether the rebate exceeds the
total amount of indirect taxes and import duties borne by inputs that
are physically incorporated into the exported product. If the rebate
exceeds the amount of allowable indirect taxes and import duties on
physically incorporated inputs, the Department will find a
countervailable benefit equal to the difference between the Reembolso
rebate rate and the allowable rate determined by the Department (i.e.,
the overrebate).
To determine whether there was an overrebate during the review
period, the Department requested the GOA to provide information on any
changes to the Reembolso program for cold-rolled steel. According to
the information provided, the program continued to be governed by
Decree 1555/86, which modified the Reembolso program and set precise
guidelines to implement the refund of indirect taxes and import
charges. The decree established three broad rebate levels covering all
products and industry sectors. The rates for levels I, II and III were
10 percent, 12.5 percent, and 15 percent, respectively. Based on the
GOA's 1986 calculation of the tax incidence in the cold-rolled carbon
steel industry, this industry was classified in level I.
In April 1989, the GOA suspended cash payment of rebates under the
Reembolso program. Pursuant to the Emergency Economic Law dated
September 25, 1989 (Law 23,697), the suspension of cash payments was
continued for an additional 180 days. Rebates accrued during the
suspension period were to be paid in export credit bonds. On March 4,
1990, the entire program was suspended for 90 days by Decree 435/90.
Decree 1930/90 suspended payments of the reembolso for an additional
12-month period.
Decree 612/91 dated April 10, 1991, reinstated cash payments of the
indirect tax rebates and import charges and reduced the rate for the
cold-rolled carbon steel industry from 10 percent to 6.7 percent.
Therefore, during the period of review, rebates were suspended from
January through April 10, 1991, and the rebate rate was 6.7 percent
from April 11 through December 31, 1991.
Using the information provided in the questionnaire response, we
calculated the allowable tax incidence for the subject merchandise
based on an updated study which SOMISA provided to the GOA in 1991. We
found that the rebate of taxes did not exceed the total amount of
allowable cumulative indirect taxes and/or import charges paid on
physically incorporated inputs, and prior stage indirect taxes levied
on the exported product at the final stage of production. Therefore, we
preliminarily determine that there was no benefit from this program
during the review period.
2. Equity Infusions
In our final determination in the investigation (see Certain Cold-
Rolled Carbon Steel Flat-Rolled Products from Argentina; Final
Affirmative Countervailing Duty Determination and Countervailing Duty
Order (49 FR 18006; 1984), we found that the GOA provided a series of
countervailable equity infusions to SOMISA under Decree 2887/78. This
decree authorized government reimbursement of debt expenditure,
including payment of interest, commissions and other fees, in exchange
for equity in SOMISA. SOMISA was also found to be unequityworthy from
1978 through 1983.
In our Final Results for the 1987 review (see Certain Cold-Rolled
Carbon Steel Flat-Rolled Products from Argentina; Final Results of
Countervailing Duty Administrative Review (56 FR 120; June 21, 1991),
we found that the Argentine Treasury continued to provide equity
infusions to SOMISA from 1984 through 1987 pursuant to Decree 2887/78,
and that SOMISA continued to be unequityworthy throughout this period.
No new information or evidence of changed circumstances has been
submitted in this proceeding to warrant reconsideration of this
determination.
We have reviewed SOMISA's financial statements for the years 1988
through 1990, and have determined that the Argentine Treasury provided
additional equity infusions pursuant to Decree 2887/78 through 1990. In
order to determine whether SOMISA was equityworthy during this period,
we applied the analysis described in the General Issues Appendix
attached to the Final Affirmative Countervailing Duty Determination:
Certain Steel Products From Austria (GIA) (58 FR 37225; July 9, 1993).
The results of this analysis have been filed on the official record of
this review. See Memorandum to Barbara E. Tillman, Director Office of
CVD/AD Enforcement VI, Regarding Certain Cold-Rolled Carbon Steel Flat-
Rolled Products from Argentina: Equityworthiness of Somisa During 1988,
1989 and 1990 dated April 4, 1997 on file in the Central Records Unit,
Room B099 of the Main Commerce Building. Based on this evaluation of
the financial statements, SOMISA continued to be unequityworthy
throughout this period.
We have determined that these equity infusions are nonrecurring
benefits and have allocated them over time. See GIA (58 FR 37226-27).
Also, consistent with
[[Page 38260]]
our equity methodology as stated in the GIA at 58 FR 27239-44, we have
treated these infusions as grants in order to determine the subsidy
conferred from these infusions. The benefit from each of the equity
infusions was then calculated using the declining balance methodology
as described in the GIA at 58 FR 37227, and used in prior
investigations and reviews.
In addition, consistent with the prior administrative review of
this order, we have converted the equity infusions into U.S. dollars
because of the periods of hyperinflation in Argentina and the changes
in the Argentine currency during this time period. This methodology has
also been used in other countries where hyperinflation and changes in
currency were an issue. See, e.g., Final Affirmative Countervailing
Duty Determination: Certain Steel Products from Brazil, 58 FR 37295
(July 9, 1993). Because we have converted the equity infusions into
dollars to account for hyperinflation and changes in national currency,
we must use a long-term discount rate in dollars. For our discount
rates, we have used the interest rates for long-term U.S. dollar
lending in Argentina for private creditors as published in the World
Bank Debt Tables: External Debt of Developing Countries. Long-term U.S.
dollar rates were also used from this World Bank source in Certain
Steel Products from Brazil.
When this review was initiated and until recently, our allocation
periods were determined by using the average useful life of a firm's
renewable physical assets as set forth in the U.S. Internal Revenue
Service's 1977 Class Life Asset Depreciation Range System. Based on
this IRS table, the average useful life of assets in the steel industry
is 15 years. However, based on a recent decision by the Court of
International Trade, we have modified our policy and we now base the
allocation period on company-specific average useful life of assets
(AUL). See British Steel et al. vs. United States et al., 929 F. Supp.
426, (1996 CIT). Therefore, we provided SOMISA an opportunity to submit
its company-specific AUL. SOMISA stated that due to the difficulty in
calculating a company-specific AUL due to the periods of
hyperinflation, it requested that the 15 year period specified in the
IRS tables be used as the allocation period. In light of the periods of
hyperinflation, we find that it would be unduly burdensome to require
the company to submit actual AUL data. Therefore, in circumstances such
as here where company-specific AUL is not reasonably available, we are
basing the allocation period on the 15 year AUL listed in the IRS tax
tables for this administrative review.
Using the above-described methodology, we determined the benefit to
SOMISA from each of these equity infusions during the review period. We
totaled these amounts to arrive at the total benefit received by SOMISA
from all of these infusions during the review period. We then divided
this amount by total sales during 1991 to calculate a subsidy of 1.54
percent ad valorem for the review period for all companies except
Propulsora which had a significantly different net subsidy rate for the
review period pursuant to 19 CFR 355.22(d)(3). The program-specific
rate for Propulsora under this program is 0.00 percent.
B. New Program Preliminarily Found to Confer Subsidies
Regional Tariff Zones for Natural Gas
While investigating the allegation of preferential natural gas
rates to the steel industry, we discovered that companies located in
different regions of the country paid different prices for natural gas.
During the period of review, Argentina was divided into nine tariff
zones for the purposes of determining the actual price of natural gas
paid by the consumer. Within each zone, a separate coefficient was
established to reflect the costs of transportation of natural gas
within the country. This coefficient was applied against the published
tariff rates to determine the actual price of natural gas for the
consumer. For example, in Zone I which covers Buenos Aires and the
surrounding countryside, the coefficient was 100 percent. Therefore, a
consumer of natural gas in Zone I paid 100 percent of the published
tariff rate for natural gas, while in Zone IX, the coefficient was 45
percent; therefore, a consumer located in Zone IX paid 45 percent of
the published tariff rate.
As noted above, these zones were established to take into account
the costs of transportation of natural gas within the country. Thus,
zones located further from the natural gas fields would have a higher
coefficient and, therefore, would have paid a higher price for natural
gas than those located closer to the natural gas fields. Propulsora was
located in Zone I, therefore, it paid 100 percent of the published
tariff rate, while SOMISA was located in Zone II and paid 95 percent of
the published tariff rate.
These tariff zones were established during 1981 and 1982 and were
based upon a study conducted by Gas del Estado (GdE), the state-owned
utility company. There was no follow-up to the original study and the
zones have remained consistent since that time except for some slight
modifications in two of the zones. We verified this program during our
concurrent 1991 administrative review of OCTG, which covered the same
allegations of preferential pricing of natural gas to the steel
industry. During verification, we requested to review the original
study which led to the creation of the zones and the coefficients. We
were informed by GdE officials that because of the age of the study and
the fact that it contained only historical data, the study was no
longer available. (See the report of the Verification of the Government
of Argentina's Response in the 1991 Administrative Review of Oil
Country Tubular Goods from Argentina (public version), which has been
put in the public file for the instant review, and can be found in the
Central Records Unit, Room B099 of the Main Commerce Building.)
Under longstanding Department practice, programs which provide
subsidies on a regional basis are countervailable. See, e.g., Final
Affirmative Countervailing Duty Determination: Fresh and Chilled
Atlantic Salmon from Norway, 56 FR 7678 (February 25, 1991) and Final
Affirmative Countervailing Duty Determination; Certain Fresh Atlantic
Groundfish from Canada, 51 FR 10041 (March 24, 1986). Because the
original study establishing the tariff zones in Argentina was done 10
years prior to our period of review, was never subsequently up-dated,
and because the GOA could not document the criteria used to establish
these tariff zones, we preliminarily determine that the lower rates
charged in zones other than Zone I constitute regional subsidies.
Because Propulsora was located in Zone I and paid the full 100
percent of the published rate, we find that it did not benefit from
this program. SOMISA was located in Zone II and paid only 95 percent of
the established tariff rate for natural gas, therefore, we
preliminarily determine that it received a countervailable benefit
under this program. To determine the amount of the benefit received by
SOMISA during this review period, we calculated the amount the company
would have paid during 1991 for natural gas if it were required to pay
the full 100 percent of the published natural gas tariff rates. We then
deducted from this amount the amount for natural gas that it actually
did pay during 1991. We then divided the difference by total sales in
1991, and calculated a subsidy of 0.30 percent ad valorem for the
review period for all companies, except Propulsora which
[[Page 38261]]
had a significantly different net subsidy rate for the review period
pursuant to 19 CFR 355.22(d)(3). The program-specific rate for
Propulsora under this program is 0.00 percent.
II. Program Preliminarily Found Not to Confer Subsidies
Preferential Natural Gas Tariffs Under Resolution 192/91
At the end of 1990, Argentina was emerging from an extended period
of hyperinflation. The GOA believed that deregulating and privatizing
the large, state-owned utility companies would lead to price stability
by introducing competition in the market. The beginning of this
deregulation can be found with the passage of Decree 633. Also, within
this context, the GOA entered into sectoral agreements with Argentine
industries in order to secure commitments from industries that they
would hold down prices charged to their customers in order to stabilize
the inflation rate within the economy. In exchange for this commitment,
the GOA committed itself to broad based economic reforms, including the
maintenance of stable energy prices.
In early 1991, the GOA began the first steps toward deregulating
the natural gas market in Argentina. Up until April 1991, the GOA set
and regulated the tariff rates for natural gas in the country. Prices
for natural gas could not deviate from those prices set by the Economy
Minister. In April 1991, with the enactment of Decree 633, two separate
markets for natural gas were created. The first market was the
wholesale market which covered transactions between producers and
distributors as well as between producers and large users of natural
gas. The other market created by Decree 633 was the retail market which
covered sales to residential and other commercial consumers. Under
Decree 633, companies in the wholesale market were permitted to engage
in negotiations and to enter into individual contracts for natural gas.
In April 1991, while the GOA was deregulating the prices of natural
gas in the wholesale market, the GOA also began to reduce the tariff
rates for natural gas in the retail market with the passage of
Resolution 192/91. Resolution 192/91 established new tariff rates which
were approximately 20 percent lower than the prior published rates in
Resolution 29/91. The rates established under Resolution 192/91 were
effective from April 1, 1991 through December 31, 1992. We were
informed by the GOA during the verification of the concurrent 1991
administrative review of OCTG, that not all companies in Argentina
received the reduced rates under Resolution 192/91. (See the report of
the Verification of the Government of Argentina's Response in the 1991
Administrative Review of Oil Country Tubular Goods from Argentina
(Public Version), which has been put in the public file for the instant
review, and can be found in the Central Records Unit, Room B099 of the
Main Commerce Building.) The tariff rates for natural gas in Argentina
were announced in resolutions published by the Economy Minister. In
order to qualify for the reduced rates, certain companies had to
provide documentation to the government that they voluntarily avoided
price increases and thus contributed to the avoidance of inflation and
currency devaluation in the country. These companies were listed in
Resolution 71/91.
By April of 1991, companies in Argentina could seek to obtain
reduced natural gas prices by two means. If the company qualified as a
large consumer of natural gas, it could seek to negotiate its own rate
with the utility company, or it could seek to qualify for the reduced
rates which were published in Resolution 192/91. Neither SOMISA nor
Propulsora negotiated individual contracts for natural gas during the
period. In addition, SOMISA did not qualify for the reduced tariff
rates published under Resolution 192/91, and it continued to pay the
higher tariff rates established under Resolution 29/91 for the rest of
1991. Propulsora did qualify for the reduced rates under Resolution
192/91 and it paid the reduced tariffs from April 1991 through December
31, 1991. Therefore, we must determine whether the reduced tariffs
under Resolution 192/91 provided Propulsora with a countervailable
benefit.
On March 27, 1991, the Ministry of Economy published Resolution
192/91, which set the new tariff rates for natural gas. These new rates
became effective on April 1, 1991. These revised rates under Resolution
192/91 applied to both home and non-home consumption of natural gas.
Under Section 4 of Resolution 192/91, the tariff rate listed in Annex V
applied to businesses, official agencies, and industries. However,
Section 17 of Resolution 192/91 stated that in order to be entitled to
the tariff rates listed in the resolution, corporations listed in
Resolution 71/91 had to submit evidence that they met the obligations
listed in Resolution 71/91. Companies listed in Resolution 71/91 had to
get a certification in order to qualify for the tariff rates published
in Resolution 192/91. A certification meant that the company was
assisting in maintaining price stability in the country by holding down
prices. Companies not listed in Resolution 71/91 automatically
qualified for the revised tariff rates published in Resolution 192/91.
Resolution 71/91 was published by the Ministry of Economy on
February 22, 1991. In the period leading up to the publication of
Resolution 71/91, there was high wholesale and retail inflation in
Argentina. According to the GOA, it was, therefore, necessary to
implement a policy for the domestic market to assist in price
stabilization to deal with the self-perpetuating hedging based on the
future expectation of inflation. In this environment, companies would
raise prices in expectation of the next month's inflation. Resolution
71/91 was published in order to dampen this price escalation.
The list of companies published in Resolution 71/91 was compiled
using three sources: (1) Large taxpayers as determined by the Direccion
General Impositiva, the Argentine tax collection agency; (2) price
setting enterprises as determined by the Commerce Secretary; and (3)
companies known by the Banco Nacional de la Republica Argentina to have
a significant amount of indebtedness. There were a total of 1,566
companies listed in Resolution 71/91. Companies named in this list had
to provide the GOA with information that they ``voluntarily avoided
price increases'' during the months of February and March 1991, thereby
contributing to the avoidance of price inflation and currency
devaluation.
If companies listed in Resolution 71/91 demonstrated to the
government that they ``voluntarily avoided price increases,'' they were
provided with a certificate from the Ministry of Economy which could be
presented to GdE. With the presentation of this certificate, GdE would
then allow the company to use the reduced tariff rates for natural gas
published in Resolution 192/91.
Propulsora was listed in Resolution 71/91 and had to provide
evidence demonstrating that it ``voluntarily avoided price increases.''
Based on the information it provided to the government, it was provided
with a certification which made it eligible for the reduced tariff
rates under Resolution 192/91. Effective April 1, 1991, Propulsora's
natural gas tariff rates were based on those set in Resolution 192/91.
SOMISA did not receive a certification and, therefore, was not eligible
for the reduced tariff rates. It continued to pay the higher tariff
rates from the previous tariff schedule under Resolution 29/91. In
order to determine whether the tariff rates announced in Resolution
192/91
[[Page 38262]]
provided a countervailable benefit to Propulsora, we must first
determine whether the rates provided in that resolution are limited to
a specific enterprise or industry, or to a group of enterprises or
industries as required under section 771(5) of the Act.
Under Resolution 192/91, all companies and businesses are
automatically eligible for tariff rates set forth in this Resolution
unless the company or business is listed in Resolution 71/91. Companies
listed in Resolution 71/91 had to be certified by the government to
qualify for the reduced tariffs in Resolution 192/91. Eighty-five
percent of the companies that applied for certification for the tariffs
in Resolution 192/91 (462 companies) were approved for the reduced
natural gas rates. In deciding whether to approve an application, the
GOA uniformly applied the criteria specified in Resolution 71/91 to
each applicant.
All companies and businesses in Argentina that were not listed in
Resolution 71/91, and 462 companies and businesses listed in Resolution
71/91 which received certifications paid the Resolution 192/91 tariff
rate for natural gas. These companies and businesses represent
virtually all industries in Argentina. Therefore, we preliminarily
determine that the published tariff rates listed in Resolution 192/91
are not limited, by law, or in fact, to an enterprise or industry or to
a group of enterprises or industries as required under section 771(5)
of the Act. As such, we preliminarily determine the rates under
Resolution 192/91 to be non-countervailable.
III. Programs Preliminarily Found Not To Be Used
We examined the following programs and preliminarily find that the
producers and/or exporters of the subject merchandise did not apply for
or receive benefits under these programs during the period of review:
Preferential Electricity Tariff Rates
Until April 1991, the tariff rates for electricity were set by the
government. On April 17, 1991, the GOA published Decree 634/91, which
provided for the deregulation of the electricity industry in Argentina.
This decree created two market levels for electricity in Argentina, the
wholesale market and the retail market. The wholesale market was
comprised of the producers, generators, and distributors of electricity
as well as the large individual consumers of electricity. Under Decree
634, the producers and generators would sell electricity through a
central dispatch agency. The distributors would then purchase the
electricity from this central dispatch agency for delivery to the
individual consumer. In order to encourage competition within the
wholesale market, a large individual consumer could negotiate a
contract with any utility company within the country. Although large
consumers could negotiate contracts for electricity in the wholesale
market, the tariff rates charged to individual consumers in the retail
market were still set by the government.
During the review period, both SOMISA and Propulsora continued to
purchase electricity at the published tariff rates for businesses and
companies in Argentina, and they did not negotiate individual contracts
with utility companies. Therefore, we preliminarily determine that this
program was not used during the period of review and need not reach the
issue of whether the program is otherwise countervailable.
Privatization Assistance Under Law 23696 and Decree 1144/92
In 1989, the GOA embarked upon a reform program designed to
restructure the economy, stabilize the currency, refinance the public
debt and reduce the public sector. A central element of this program
was the privatization of large public enterprises. The general
privatization law, Chapter II of Law 23696, published on August 17,
1989, established procedures for the transfer of state assets to the
private sector. Among other provisions, it provides that the Executive
Branch may (1) decide which assets will be privatized; (2) reorganize
going concerns and transfer assets and liabilities from those concerns
prior to privatization; and (3) assume the debt of public enterprises
undergoing privatization.
Law 23696 requires that before an entity may be privatized, the
Executive Branch must declare it subject to privatization and an Act of
Congress must be promulgated. SOMISA was one of twenty-six companies
under the aegis of the Ministry of Defense that were declared subject
to privatization on July 23, 1990. Congress ratified that declaration
in Act 24045 on December 31, 1991. As stated above, Law 23696 allows
the GOA to reorganize state-owned companies which are to be privatized
and to also assume the debt of state-owned companies undergoing
privatization. Although SOMISA was not privatized until November 1992,
we must examine whether SOMISA received any countervailable benefits
under this GOA program during 1991, our period of review. Propulsora is
a privately-held company and, therefore, did not fall under the purview
of Law 23696.
In order to qualify for the treatment of debt specified under Law
23696, a company must be partially or wholly-owned by the government,
and be the subject of either privatization or liquidation. Under Law
23696, any type of liability, whether derived from labor or social
security obligations, customs duties, lawsuits, contract disputes,
fines or penalties, or liabilities that arose from the normal
functioning of business could be assumed directly by the government.
Under Law 23696, SOMISA's public sector debt acquired before April 1,
1991, was eligible for consolidation and assumption by the GOA.
Although the debt acquired by SOMISA before April 1, 1991 was covered
under Law 23696, the actual assumption of SOMISA's debt by the
government was not authorized until 1992, under Decree 1144/92. Decree
1144/92, which was enacted July 15, 1992, also (1) canceled all of
SOMISA's debt acquired from April 1, 1991 until January 1, 1992; (2)
exempted SOMISA from the stamp tax and from other taxes which are
imposed on the transfer of assets and land; and (3) stated that the GOA
would assume SOMISA's labor-related obligations incurred prior to its
privatization.
Decree 1144/92, which authorized SOMISA's debt consolidation and
assumption was not enacted until after the period of review and there
was no debt assumption or forgiveness during the period of review.
Therefore, we preliminarily determine that SOMISA did not receive any
benefits during the period of review from the debt consolidation and
assumption under Law 23696, nor did it receive benefits under Decree
1144/92 during the period of review.
The following programs also were not used during the review period:
Medium- and Long-Term Loans.
Capital Grants.
Income and Capital Tax Exemptions.
Government Trade Promotion Programs.
Exemption from Stamp Taxes Under Decree 186/74.
Incentives for Trade (Stamp Tax Exemption Under Decree
716).
Incentive for Export.
Export Financing Under OPRAC 1, Circular RF-21.
Pre-Financing of Exports Under Circular RF-153.
Loan Guarantees.
Post-Export Financing Under OPRAC 1-9.
Debt Forgiveness.
[[Page 38263]]
Tax Deduction Under Decree 173/85.
IV. Program Preliminarily Found Not to Exist
1. Tax Concessions for the Steel Industry
Petitioners alleged that, under Paragraph 8 of the April 11, 1991
Steel Agreement between the GOA and Argentine steel producers, the GOA
provides the steel industry with tax concessions. According to the
response of the GOA, Paragraph 8 of the Steel Agreement does not
provide tax concessions to the steel industry but merely states that
the industry's Reembolso level will be studied taking into account the
tax incidence of steel producers. For information on the Reembolso/
Reintegro program, see the section ``Rebate of Indirect Taxes,'' above.
Therefore, we preliminarily determine that there were no new tax
concessions provided to the steel industry under the Steel Agreement.
Preliminary Results of Review
For the period January 1, 1991 through December 31, 1991, we
preliminarily determine the net subsidy to be 0.00 percent ad valorem
for Propulsora and 1.84 percent ad valorem for all other companies.
If the final results of this review remain the same as these
preliminary results, the Department intends to instruct the U.S.
Customs Service to assess the following countervailing duties:
------------------------------------------------------------------------
Rate
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Propulsora................................................. 0.00
All Other Companies........................................ 1.84
------------------------------------------------------------------------
The Department also intends to instruct the U.S. Customs Service to
assess these countervailing duties on entries of the subject
merchandise covered by this administrative review for the period
January 1, 1991 through September 19, 1991, and to liquidate all
entries made on or after September 20, 1991, without regard to
countervailing duties. This countervailing duty order was revoked
effective January 1, 1995. As such, no further instructions will be
sent to Customs regarding cash deposits.
Parties to the proceeding may request disclosure of the calculation
methodology and interested parties may request a hearing no later than
10 days after the date of publication of this notice. Interested
parties may submit written arguments in case briefs on these
preliminary results within 30 days of the date of publication. Rebuttal
briefs, limited to arguments raised in case briefs, may be submitted
seven days after the time limit for filing the case brief. Parties who
submit argument in this proceeding are requested to submit with the
argument (1) a statement of the issue and (2) a brief summary of the
argument. Any hearing, if requested, will be held seven days after the
scheduled date for submission of rebuttal briefs. Copies of case briefs
and rebuttal briefs must be served on interested parties in accordance
with 19 CFR 355.38(e).
Representatives of parties to the proceeding may request disclosure
of proprietary information under administrative protective order no
later than 10 days after the representative's client or employer
becomes a party to the proceeding, but in no event later than the date
the case briefs, under section 355.38(c), are due.
The Department will publish the final results of this
administrative review including the results of its analysis of issues
raised in any case or rebuttal brief or at a hearing.
This administrative review and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.
Dated: July 10, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-18871 Filed 7-16-97; 8:45 am]
BILLING CODE 3510-DS-P